BenchmarkingusingtheBPOMaturityModel

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1、Benchmarking using the BPO Maturity ModelByDr. Kevin McCormackDRK Research and Consulting LLCClearly, becoming business process oriented in an organization represents a significant challenge yet potentially high returns. Defining the end goal of this journey and finding out where you are on this jou

2、rney is critical. This paper answers these questions by describing how to use the BPO measurement instrument to position an organization on a BPO maturity model.What is BPO Maturity?8Copyright2000DRK Research and Consulting LLCIn creating a BPO maturity model we defined maturity as the stages throug

3、h which an organization progresses in becoming business process oriented, ultimately realizing an end goal of being fully process integrated. A major inspiration for the model comes from Philip Crosby, who developed a maturity grid for the five stages companies go through in adopting quality practic

4、es. Crosby suggested that small, evolutionary step, rather than revolutionary ones, are the basis for continuous process improvement. We believe the same holds true for BPO. Each successive step includes more practices involving more functions and more people within a given organization.As we analyz

5、ed the data collected from 1997 through 1999, we saw patterns and clear evolutionary stages. After examining these patterns and the stages as quantified by the BPO measurement instrument, we developed the following definitions and numerical ratings (0-5) for the stages that an organization goes thro

6、ugh when becoming business process oriented. Ad Hoc: The processes are unstructured and ill defined. Process measures are not in place and the jobs and organizational structures are based upon the traditional functions, not horizontal processes. Individual heroics and “working around the system” are

7、 what make things happen across functions and departments. This is BPO stage is defined by a BPO score of 0-2. Defined: The basic processes are defined and documented and are available in flow charts. Changes to these processes must now go through a formal procedure. Jobs and organizational structur

8、es include a process aspect, but remain basically functional. Representatives from function (sales, manufacturing, etc.) meet regularly to coordinate with each other, but only as representatives of their traditional functions. Similarly, functional representatives meet to coordinate activities with

9、vendors and customers. Companies reaching this level of process maturity core record scores of between 2-3. Linked: The breakthrough level. Managers employ process management with strategic intent and results. Broad process jobs and structures are put in place outside of traditional functions. One c

10、ommon indicator is the appearance of the title ”process owner. Cooperation between intra-company functions, vendors and customers takes the form of teams that share common process measures and goals that reach horizontally across the company. A BPO score of between 3-4 characterizes firms at this le

11、vel of BPO maturity. Integrated: The company, its vendors and suppliers, take cooperation to the process level. Organizational structures and jobs are based on processes, and traditional functions begin to be equal or sometimes subordinate to process. Process measures and management systems are deep

12、ly imbedded in the organization. Firms that score between 4-5 we define as truly integrated, having achieved optimal balance between process and function.Figure 5.1 shows the four levels of BPO maturity with the horizontal aspects, or process orientation, becoming more clear and powerful and the ver

13、tical functional aspects becoming less dominant as an organization progresses along the maturity path. At the highest level of maturity, the horizontal appears as strong an orientation as the functional or vertical orientation. In the maturity model, this is shown as strong, heavy horizontal lines c

14、rossing strong, heavy vertical lines. This represents the ultimate balance between process and functional orientation.Figure 5.1. The BPO Maturity Model and the Phases of BPOHere is how to interpret the maturity model shown in Figure 5.1. At the ad hoc level the horizontal processes are barely visib

15、le and the functions or vertical silos are strong and clearly the way the organization is viewed, structured and measured. The defined level is shown as still having dominant functions but the horizontal processes are slightly more visible and a process structure and measures beginning to appear. Th

16、e linked level clearly shows horizontal processes defined and structured almost on par with the vertical functions but there are gaps in the processes. At the integrated level the horizontal processes are strongly visible and on par with the vertical functions. There are no gaps, the horizontal stru

17、cture is clear and process measures help provide a horizontal focus. By combining the BPO measurement tool and the maturity model we can graphical place on organization on this continuum. Since the measurement tool produces an aggregate rating for an organization from 1 to 5 we can calculate the ind

18、ividual rating of an organization from the surveys completed within that organization. Using the results of our earlier research, we developed numerical scores that seem to correspond to the different maturity levels as described earlier.Figure 5.2 shows the mid point scores for each level of BPO ma

19、turity. A score of between 0-2 would put and organization at the ad hoc level, between 2-3 at the defined level, 3-5 at the linked level and 4-5 at the integrated level.Figure 5.2. BPO Maturity Scores by LevelIn this way, the views of the key informants in an organization can be gathered using the t

20、ool and aggregate scores can provide the current location of an organization on this “Mall Map”. Like the locators at the entrance of most shopping malls, an organization can plot a “You are here” point and understand how far they have come and plot their journey forward,Benchmarking Using the BPO M

21、aturity ModelAn organization that is trying to become business process oriented can sometimes find it helpful to compare themselves to other organizations. The BPO measurement tool and the maturity model can be very useful in this effort and the current database of firms having used the tool to meas

22、ure their progress is close to one hundred and growing.There are three steps involved in this benchmarking effort. 1. Gathering the initial data and plotting the results on the high-level maturity model.2. Examining individual BPO component/outcome scores using BPO maturity model.3. Comparing the de

23、tailed answers to the benchmarking database.The first step in conducting this comparison or BPO benchmarking is to gather the data on your specific organization. This is accomplished by selecting 20-30 “key informants” within an organization that can complete the BPO measurement survey (see appendix

24、 A). After aggregating and averaging the answers, the benchmarking begins by plotting the BPO score on the high-level maturity model show in Figure 5.3. For example, if the overall BPO score were 2.84 then the organization would be positioned as shown, slightly beyond the defined stage. The percenta

25、ges show on the high-level maturity model represent the percentage of respondents at each stage in the database.Figure 5.3. Benchmarking an Organizations BPOThe next level of comparison could be undertaken by looking at the scores for each of the components of BPO and its outcomes. This would includ

26、e the BPO components of Process View (PV), Process Jobs (PJ), and Process Management and Measures (PM) and the impacts of Inter-functional Conflict (IF), Inter-departmental Connectedness (IC), Esprit de Corps (EC), and Overall Business Performance. Figure 5.4 is a more detailed maturity model used f

27、or this comparison. The detailed model has the total possible and database mean score for each component and impact. The model also indicates the contribution of a BPO component to each level on the maturity scale. For example, Process View (PV) can move and organization from ad hoc to defined but,

28、by itself, no further. Therefore the scale for PV on the model ends at the top of defined. Another example is Process Jobs (PJ) and Process Management and Measures (PM). This effort toward BPO can not even begin until an organization has the first portion of process view underway since the processes

29、 have to be first identified at a basic level before jobs and measurements can be put in place. For this reason the scale for PJ and PM does not even begin until the defined stage is reached.Figure 5.4. Detailed BPO Maturity Model ExampleFigure 5.4 contains an example of how the second level benchma

30、rking results would be placed on the detail maturity model. The vertical bars represent the average scores of the organization being examined. The left side of the model contains the BPO components and the right side, the outcomes. A numerical score is shown at the top of each bar. This is the avera

31、ge score for this category. The total possible score is shown at the top of the scale and the mean is shown in the center of the scale.In this example, this organization is slightly above the defined stage, as pointed out with the high-level maturity model. The process management and measures (PM) c

32、omponent is clearly leading the way while the process view (PV) component is lagging. This company has “put the cart before the horse”. A low process view score might suggest that many people in the organization dont understand the processes in the organization or that not all the processes are docu

33、mented to a level where people can understand them.The impact section seems to be inline with an organization in the early stages of Linked with conflict (IF) being the most leading. This scale is reversed from the actual scores since IF has an inverse relationship with the other variables. As BPO i

34、ncreases conflict is reduced but in this case, since we reversed the scales high IF numbers are good. The third level of benchmarking and analysis is accomplished by looking at the answers to specific questions within the BPO measurement tool. Since process view seems to be an issue with this exampl

35、e, the answers to the three questions around process view (PV) will be examined. Figure 5.5 shows the answers for this specific organization compared to the database. The horizontal bars are the mean of the answers in the database and the diamond positions the mean of the specific organization being

36、 examined. The percentage of respondents answering each question with a 1, 2,3,4 or 5 (where 1 equals “completely disagree” and 5 equals “completely agree”) is also show just above the bar.Figure 5.5. Benchmarking Detailed Questions Regarding PVThe detailed answers to the process view questions show

37、 clearly that this organization is well under the mean on all three areas of employee process orientation, the use of process terms and organizational understanding of the processes. By sorting the individual answers by groups, functions or titles within the organization the problem areas can be fur

38、ther identified and action can be taken to improve on this BPO component.Using BPO Maturity to Align the E-corporationCompeting in todays economy is no longer between individual companies but between groups of companies organized in value networks. According to Northwestern Professor Philip Kotler,

39、“increasingly, competition will not between companies but rather between marketing networks.” 1 Kotler, Philip. (2000). Marketing Management, Millennium Edition, Saddle River, NJ: Prentice-Hall, p. 13 Partnerships, alliances, joint ventures and cross company collaboration are all basic modes of orga

40、nizing business networks. With the dawn of the digital and Internet age, the next level of competition is cross company process integration across this network. A major challenge to for competing in the Internet economy is to achieve BPO compatibility among the companies involved in the network. Fig

41、ure 5.6 is a picture of a simple network complete with the level of BPO maturity of each participant. In this example, there is a company that is the hub of the network, which adds value by bringing together suppliers and customers. This could be a retail company, a distribution company or a value a

42、dded bolt manufacturer. A likely scenario for todays e-corporations is the following. The network is made up of supplier and customer companies representing each of the BPO categories; ad hoc, defined, linked and integrated. The company in the center of this network, or the builder of the network, a

43、lso has its own BPO level. In this case linked.Figure 5.6. BPO Network Compatibility for the E-CorporationHow can all these different BPO “personalities” inter-operate successfully at the process level? The answer is that each cross company process in the network must be tuned to the lowest level of

44、 compatibility. In this example, the organizing company in the center is at the linked level and one of their customers is at the integrated level. The process connecting the two must be limited to the linked level since the organizing company cannot operate at a level any hiring than this. Process

45、shock absorbers (usually people that span the two organizations) must be used to balance the interactions.On the supplier side, the organizing company in the center must build links tuned to each supplier. An ad hoc supplier must be linked with an Ad hoc compatible link and the defined with a define

46、d link. If this is not in balance, the network will be ripped apart due to process incompatibility.From this example, you can see how the BPO measurement system can be used as a critical strategy tool for building the e-corporation networks for todays economy. Assessing the BPO maturity level of all

47、 the partners and customers is a major prerequisite for building a successful network.ConclusionThe BPO measurement tool and maturity model can be a useful tool to determine an organizations current position on the journey of becoming business process oriented and in developing a strategy for buildi

48、ng the e-networks to compete in todays Internet economy. Understanding exactly where efforts should be focused and having a tool to measure progress should be valuable to companies involved in building business process orientation. In addition to the BPO measurement tool and maturity model, we have

49、included an additional assessment tool in the appendix. This tool, the Business Process Assessment Tool, adds additional depth to understanding the practices that are needed to be in place for successful business process orientation.Building e-networks for todays Internet economy is a tremendous cha

50、llenge. Building these networks at the process level is very dangerous without understanding the process orientation of each actor in the network. The problem of BPO incompatibility can destroy a network very quickly.About the AuthorDr. Kevin McCormack has over 25 years of business leadership and co

51、nsulting experience in manufacturing, high tech and IT services industries, both in the U.S. and in Europe with companies such as Kraft, Philip Morris, Texas Instruments, Microsoft, General Mills, USMC and Wal-mart. He holds Engineering and Chemistry degrees from Purdue University, an M.B.A. and a d

52、octorate in business administration. He teaches in the MBA program at the University of Alabama at Birmngham, is President of DRK Research and Consulting LLC (www.drkresearch.org) and is also a published researcher and author. His book, “Business Process Orientation: Gaining the e-business competitive advantage” and his new book, “Supply Chain Networks and Business Process Orientation” are both available from CRC Press at on from A. He can be contacted at kmccorm241.Notes